The director of a care home investment scheme has received a disqualification order from the Insolvency Service.
Sean Murray used to run CHF 9, a company incorporated in October 2017 which was used as a vehicle to secure investment to build care home apartments and studios in County Durham.
Investors put a total of £8.1m ($10m, €9.4m) towards the scheme with the aim to build 51 care studios. Marketing collateral showed plans for 45 studios in a Grade II listed building near Bishop Auckland and a further 40 in the surrounding land, the Insolvency Service said.
But CHF 9 went into administration in December 2019 before entering into creditors’ voluntary liquidation in December 2020.
Investigators discovered that the company purchased the Grade II listed building in November 2017 for around £350,000 and the surrounding land for £500,000 a month later.
However, CHF 9 needed planning permissions to make any changes to the exterior or interior of the building. The local authority told the firm it would not allow 80 studios to be build, rather it advised that 10 to 15 would have been more appropriate.
Murray was the one who sought investment for the project, and Insolvency Service investigators found that none of the money that was supposed to go towards the building of care studios was paid into CHF 9’s bank account.
More than £3.3m was paid into the account of a connected company, a further £2.8m was paid to the firm’s solicitors before £1m was paid out of CHF 9’s accounts.
Murray’s 10-year ban was approved by the secretary of state for business, energy and industrial strategy and the ex-director did not dispute that he entered into 51 contracts with investors when he did not have planning permissions for the studios in the Grade II listed building.
The disqualification order came into effect in May 2022.
Robert Clarke, chief investigator for the Insolvency Service, said: “Our enquiries found that the majority of investors would not have invested had they known that CHF 9 didn’t have planning permissions to build the care apartments.
“Sean Murray has rightfully been removed from the corporate arena for a significant amount of time. This should serve as a stark warning for potential investors to do your due diligence, as well as making clear to directors involved in investment schemes that we have the powers to disqualify you from running limited companies.”